Just a few hours before the blasts, Lieutenant-General Abboud Qanbar led reporters on a tour of the neighbourhood near the marketplace and promised to "chase the terrorists out of Baghdad".

Nuri al-Maliki, the Iraqi prime minister, condemned the bombings as a desperate act by "terrorists" and "criminals" who sense they are being squeezed.

"These crimes confirm the defeat of these perpetrators and their failure in confronting our armed forces, which are determined to cleanse the dens of terrorism," he said in a statement.

Two more US soldiers have been killed in action, the US military said. Both were killed on Saturday: one by a grenade in a northern neighbourhood of Baghdad; the other from gunfire north of the city.

Borders re-opened

Iraqi police had reported finding just five bodies in Baghdad on Saturday, a dramatic drop from the 40-50 they typically report.

It was one of the lowest tolls since the bombing of a Shia shrine in Samarra a year ago that intensified a wave of sectarian violence that has caused tens of thousands of deaths.

Before the blasts, Iraq had started to reopen its borders with Iran and Syria on Sunday as the operation appeared to bear fruit.

The deadly blasts in New Baghdad on Sunday targeted a mainly Shia district [Reuters]

Trucks and cars began to flow over the Shalamchen border crossing between Iran and southern Iraq, three days after al-Maliki ordered the frontiers sealed as part of the security plan.

In another development, Tariq al-Hashemi, vice-president and a leader of the predominantly Sunni Iraqi Islamic Party, said US officials should consider the Mahdi Army a "terrorist militia" after announcing that it posed the gravest threat to Iraq's security.

Speaking to Al Jazeera, he also blamed Arab states for what he called their failure to get involved in efforts to resolve his country's crisis.

In related news, Tehran formally denied that al-Sadr was in Iran, rebuffing claims by Iraqi and US officials that he had left for the Islamic Republic.